What is ‘SELLING OFF MARKET’?

The upside and the downside

In recent years, selling ‘off market’ has become a mainstream phrase. Getting a universal definition of what selling off market constitutes is far more problematic though.

If you thought you understood what selling off market meant and then became deeply confused when you saw a Domain advertisement offering you off market listings, you could be forgiven.

Property Whispers is a website that specialises in off market listings. On their company website, it states “Property Whispers launched in  2017 as the world’s first ‘Off-Market’  property sales platform, instantly matching  buyers  and  their property requirements with all suitable off- market properties in their chosen area. ‘Off- Market’ properties are those not publicly advertised and make up approximately 10-20% of real estate sold nationally in Australia each year”.

It is telling to note that 80% of properties listed off  market morph into full blown sales campaigns.

You can bet your last dollar, that if agents are going to put the listing on any website, they will start with their own agency’s website first. So, if listings are appearing on all these property dedicated websites, are they really ‘off market’?

Selling off market can be defined in part or in total as:

A sale by way of a direct approach to the vendor from a buyer,

A  sale without a signboard out the front of the property,

• A sale whereby agents introduce buyers to a property exclusively from their database, without any advertising campaign taking place,
• An email only campaign,
• A property that is only displayed on the listing agents website, and
• A sale that occurs where the agent negotiates a sale before the campaign is launched and/or after the property has been withdrawn from the market.

What an off market sale is not:

• A private treaty sale,
• A campaign that relies exclusively on ‘Inspections By Appointment’,
• A Risk Free campaign for the vendor where the agent takes the risk of the advertising campaign yet lists the property on all the major property websites, and
• A failed auction campaign that later sells by negotiation.

Off market sales have exploded in popularity because both agents and vendors are looking to transact with- out spending thousands of dollars on web advertising with the major property websites.

The most common and advisable use of off market selling is where the property is photographed and listed exclusively on the listing agent’s website.  The agent can then use their database, email, SMS, social media and phone calls to drive web traffic back to the property on the agent’s website.

The property can be exposed to the best buyers in the market place, the agent can gather market feedback and the owner can avoid the need of an expensive advertising campaign that may or may not produce an acceptable result.

The property is off market in the sense there are no open inspections, no signboards, no advertising ex- penses and most importantly, the agent is not adding to the digital foot print via  the real estate data compa- nies that operate in the back ground. These data companies scrape data from the major property websites collecting and collating advertising history of each and every advertised property, every week!!

To understand  the importance of a digital footprint, google search your address or look it up on CoreLogic.

Listing tool

Real estate sales is hypercompetitive between real estate agents. The smallest edge can sometimes be the thing that tips a listing from one firm to another. The off market strategy is one that is often used to win listings.

The basic pitch goes, let’s try it off market for a high price and judge the buyer’s response after a few weeks. The agent produces an Exclusive Agency Agreement with a term that can be up to 90 days in length. If and when the vendor signs, they have inadvertently signed up for 90 days on what was meant to be a 14 day strategy.

Agents like the off market listing strategy because it allows them to secure the listing without having to ex-tract $6,000 or $10,000 from the owner for an advertising campaign at the time of listing. That discussion with the owner comes later,  once the listing has been secured and the competition have been played out of the equation.

It is telling to note that 80% of properties listed off market morph into full blown sales campaigns.

Therefore selling off market from the owner’s  perspective is more about ‘listing off  market’ from the agent’s perspective.

In conclusion

One property website that supports off  market sales states, “Buyers can be alerted about homes that match their criteria within hours of the vendor signing the paperwork with their agent, and potentially weeks ahead of the rest of the market. They can then inspect the home, make an offer, and buy the property before others even know it’s for sale.”

The benefit of selling off market is clearly articulated in this statement. However,  when the vendor is the one that pays the selling agent a substantial  commission, why would the agent use a strategy that benefits a short-listed number of preferred buyers?

When deciding whether you should or should not sell off market, you should consider both the benefits and the downside of listing your property on the open mar-ket. The stronger the market conditions, the stronger the case for selling on the open market.

Just because you can sell off market does not mean you should.

By Peter O’Malley, author of Inside Real Estate